New Zealand's services sector contracted in June from May, the latest BNZ Capital-Business NZ Performance of Services Index (PSI) showed. The broader services industry accounts roughly for two-thirds of New Zealand's Gross Domestic Product (GDP), with the latest result an indication the recession will carry on through the second quarter of 2009 as predicted. The June PSI was 45.0, down 1.2 points from May. A PSI score above 50 represents expansion in the sector, while a score below 50 represents contraction. New Zealand's services sector has constantly been in contraction since April 2008, the PSI showed. "By and large, New Zealand's service sector has held up better than many of the higher profile, and more easily defined, sectors around, such as manufacturing, the housing market, forestry and, most recently, the dairy sector. But it hasn't been immune from the recession," BNZ economist Craig Ebert said.
The 'forward orders' component of the PSI registered its first expansion in a long while, Ebert said, "amid evidence that over-stocking was being dealt with in an aggressive manner. These are good omens for forward production." "Yet not all's well in the services sector. Not by a long chalk. The steady overall results comprised some of the larger components growing very well, but with many more of the smaller components going backwards at a serious rate of knots," Ebert said.
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